Carol Baker, the portfolio manager of an aggressive-growth mutual fund, maintains an account in her husband’s name at several brokerage firms with which the fund and a number of Baker’s other individual clients do a substantial amount of business. Whenever a hot issue becomes available, she instructs the brokers to buy it for her husband’s account. Because such issues normally are scarce, Baker often acquires shares in hot issues but her clients are not able to participate in them. In this case, how is Carol Baker violating the standard? As the Standard states, family accounts should neither be disadvantaged nor advantaged. They should be treated like any other client account. Now, as she maintains the account is his husband’s name, how is she the beneficial owner? Why should he place other clients’ interest before this husband client??
It seems here that her husbands account does have an advantage: " Whenever a hot issue becomes available, she instructs the brokers to buy it for her husband’s account" also: " Baker often acquires shares in hot issues but her clients are not able to participate in them". She is violating priority or transactions and loyalty to clients.